Posted by Tim Stobbs on January 8, 2009
Well after getting a copy of this book ages ago I finally got around to reading Wise Investing Made Simple by Larry Swedroe. At 176 pages and short chapters it actually made ideal bus reading material because it was fairly quick to read and easy to pick up after putting down for a bit.
Overall the book had one fairly simple goal. To hammer home the odds of you beating the market consistently for a long period of time is futile. So hence you are suppose to embrace index investing as a solution to the problem and keep your fees low. Overall I would say Larry succeed with his goal as most of the chapters are short little tales about a certain concept or myth people have about the market.
Perhaps the one concept I like the best in the book was the allusion that picking a stock with a huge increase in price is similar to finding a $20 bill on the street. It just won’t happen all that often in your life, so don’t bother trying to spend your life looking for that next $20 bill.
Yet despite the logic of all his arguments I’m still not going to be 100% index investing. Why? Because one of the fatal flaws of index investing is it is boring. So in order to keep myself a little bit more entertained and meet one of my other investing goals of an income stream from investing I’m going to continue with about 20% of my portfolio set aside for stock picking. I understand the risk and I’m doing it anyways.
So if you are already a firm believe in index investing you can skip the book as there really isn’t anything to useful to you. Yet if you still have some doubts about index investing the book is a useful and might provide some reassurance that you are doing the right thing.